Skip to content
Freeths - Law firm
Articles Corporate 10th Aug 2017

Legal Privilege – a diminishing safeguard for Corporate Defendants

Internal investigation reports undertaken by a Company are extremely important in seeking to understand what and why a serious incident, possibly involving a death, has occurred.

Furthermore, as UK prosecuting authorities and Regulators take an increasingly aggressive stance to corporate wrongdoing, internal investigations have become increasingly significant as a means of effectively managing legal and reputational risk.

But how do you prevent those same Regulators from obtaining a copy of the internal report?

Legal privilege plays a key part in this process albeit companies need to understand the limitations that come with this and when this can and cannot be asserted!

What is Legal Privilege?

The law of England and Wales recognises 2 main types of legal privilege which are litigation privilege and legal advice privilege (discussed below). Legal privilege is important because a document that is privileged does not have to be disclosed in legal proceedings, to Regulators, or to other third parties. A document for these purposes is anything that is recorded and includes letters, emails, tape recordings and other communications.

Legal privilege only protects documents which are confidential and therefore, generally speaking, documents already in the public domain will not attract privilege. Furthermore, legal privilege is not retrospective and cannot apply if a document existed before bringing in the lawyers.

It is also worth noting that there are real doubts, following European cases, that in-house Counsel can give legal privilege.

What is the difference between Litigation Privilege and Legal Advice Privilege?

Litigation privilege applies to all confidential communications between a client and a lawyer when legal proceedings are either in existence or are ‘reasonably contemplated’. Until now, a fully fledged criminal investigation by a Regulator has given rise to the reasonable belief that a prosecution may reasonably be contemplated!

Legal advice privilege, on the other hand, applies to all confidential communications between a client and a lawyer that take place for the purpose of that lawyer giving or obtaining legal advice to the company. This extends to all material forming part of a ‘continuum of communications’ even if those documents do not expressly seek or convey legal advice.

It is important to distinguish between the two as litigation privilege is far wider reaching and protects confidential communications between a client, lawyer and third party (for example, an expert witness). Legal advice privilege does not automatically extend this far and therefore it is crucial to try and ensure that internal investigations are, if possible, covered by litigation privilege from the outset though both is even better!

Why is there now concern around Legal Privilege and internal investigations?

The recent case of ‘Director of Serious Fraud Office v Eurasian Resources Corporation’ was the first time that the High Court had been asked to consider the circumstances in which legal privilege could arise against the background of a criminal investigation taking place.

The SFO had investigated the company for various offences including bribery, fraud, and corruption. As part of their criminal investigation they sought to compel the company to produce various documents which the company claimed legal privilege over.

The High Court, when assessing the circumstances, rejected the company’s assertion that legal privilege applied to most of the documents sought by the SFO and controversially appeared to significantly narrow the parameters of legal privilege in the context of internal investigations.

On the subject of litigation privilege, the Court said that a criminal investigation by the SFO was merely a preliminary step and could not be regarded as ‘litigation’. Furthermore, when looking at the question of whether legal proceedings could alternatively be regarded as being ‘reasonably contemplated’, the Court concluded that whilst each case must be judged on its own facts, a criminal investigation did not automatically equate to a reasonable contemplation of a prosecution. In other words, unless Companies receive notice of a prosecution, it must not be assumed that they will be able to sit behind litigation privilege as a means of refusing to disclose documents gathered during the course of an internal investigation simply because they are under investigation and reasonably contemplate a prosecution.

The High Court adopted an equally restrictive approach when commenting on the scope of legal advice privilege. It was emphasised that this only applies to communications between a lawyer and those individuals authorised by a company to seek and receive legal advice. This does not extend to other employees of the company however senior in the corporate hierarchy! Furthermore, the High Court also made it clear that documents which have been obtained during the course of an internal investigation (including witness statements) would only attract legal advice privilege if they ‘give a clue as to the legal advice or any aspect of legal advice given’.

How can I protect Legal Privilege in the context of an internal investigation?

The recent decision of the High Court is clearly a concerning one and, whilst this may be the subject of an appeal, it appears to represent a clear and significant erosion of a fundamental right of protection that has existed for many years. In the meantime Regulators and law enforcement agencies alike will, naturally, be buoyed by this decision.

Nonetheless, until the appeal is decided, you should still try to protect an internal investigation with legal privilege. However, as the assertion of privilege is increasingly subject to scrutiny and challenge, companies should consider the following factors when conducting an internal investigation, so as to protect themselves as much as possible;

  • Involve lawyers at an early stage – whilst the involvement of lawyers will not automatically clothe the entire investigation it will offer the best prospect of maximising protection.
  • Consider the client – remember that employees without authority to instruct lawyers do not qualify as a ‘client’ and therefore it is essential for this to be defined at the outset of any investigation.
  • Employee interviews – instruct employees and those conducting interviews to keep the content of any meeting confidential and undertaken for the external lawyer.
  • All communications pertaining to legal advice – these should be clearly marked as ‘privileged’ and confidential. Companies should also be explicit on whether the advice sought relates to potential criminal/civil liability (or both) so that it is clear that the dominant purpose of any investigation is the prospect of litigation as opposed to purely a fact finding exercise being carried out solely by the company. In short, the external lawyer must be involved and not be on the periphery.

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

Client service

‘Doing the right thing’ is at the heart of Freeths. Find out more about our excellent client service and the strong set of values that guide the way we work.

Our service


Talk to us

Freeths are a leading national law firm with 13 offices across the UK. If you have a query about our services or just want to find out more, why not give us a call?

Contact: 03301 001 014

Choose an office:

Portfolio close
People CV Email

Remove All

Click here to email this list of people to a colleague.